Today's Market: Market Ends Week on Uncertain Note Ahead of Election

A week after the Dow's giddy 210-point rally, the index took an about-face to close in the red.

Author:: Betsy Riley
Publish date:: Nov 3, 2000 5:53 PM EST

A week after the Dow's giddy 210-point rally, the index took an about-face to close in the red.

Uncertainty and lack of conviction characterized today's markets ahead of

Cisco's

(CSCO) - Get Report

Monday earnings announcement and Tuesday's Presidential election.

The end of this week for the

Dow Jones Industrial Average looked a lot different from last Friday's 210-point gain. Today, the index took an about-face and, though it was off its lows, ended firmly in the red.

The

Nasdaq Composite Index had a bit of a bumpy morning but spent the afternoon modestly on the upside. Not a strong finish for the tech-heavy index, but at least it was in positive territory.

One piece of news that didn't help the Dow was the

employment report

, which showed that job growth slowed in October, but that unemployment remained at its 30-year low rate of 3.9%, while average hourly earnings rose. Labor markets that are too tight and wages that are too high are inflationary, and inflation, of course, is considered bad for the economy and for business. Investors were hoping for an indication that the

Fed would ease up on interest rates.

The wage inflation number is particularly important, considering signs from yesterday's

productivity report

that showed the rate of worker compensation was rising faster than expected.

TheStreet.com

wrote a separate

story that looked at what the jobs report says about the economy.

The Dow had its work cut out for it, fighting drag from 19 of the 30 blue-chips.

J.P. Morgan

(JPM) - Get Report

took away the most with almost 21 negative points.

General Motors

(GM) - Get Report

and

Microsoft

(MSFT) - Get Report

also weighed it down for a total of about 27 points.

Meanwhile, the Comp got support from

Qualcomm's

(QCOM) - Get Report

earnings announcement last night, which

beat estimates by a penny. Though the company's top-line revenue growth was weaker than expected for the quarter, it said it was comfortable with fourth-quarter estimates. Qualcomm jumped 12.3% and was one of the Nasdaq's most actively traded stocks.

The comeback stock of the day was the ever-volatile

Rambus

(RMBS) - Get Report

, which ended the day 28% higher. The stock jumped on news that it had signed a patent license agreement with

Samsung Electronics

. Earlier this week, the stock fell 25% at one point after a report came out that

Intel

(INTC) - Get Report

was cutting back on its use of Rambus technology.

Unfortunately, the Nasdaq also had a couple poor performers today, namely

priceline.com

(PCLN)

, which got crushed after reporting disappointing results for the third quarter, as well as layoffs and the departure of its CFO. A multitude of analysts cut earnings estimates for the next couple of years, and

Goldman Sachs

and

Merrill Lynch

downgraded the stock today. priceline ended the day down 31%, or $2.13, to $4.72.

Richard Williams, vice president and market analyst at

Jefferies

, said the Comp's modest rally today reflected business-to-business stocks working their way higher on an otherwise sideways Nasdaq. "I believe they are rebounding from their early October selloff," he said.

He said that once Tuesday's election results make themselves felt in the market, which could take a few weeks, his models "indicate the Nasdaq will retest the 3026 level."

The other factor that seemed to be affecting investors was Cisco's earnings announcement, due out Monday. Williams, who doesn't cover the company, said, "Cisco appears to be suffering from the same potential slowing that other highly valued large-cap tech stocks are subject to."

He added, "Cisco may provide insight to potential slowing that we see in other companies."

Elsewhere,

Quaker Oats

(OAT)

bounced almost 9%, or $7.38, to $89.63, on news that

PepsiCo

(PEP) - Get Report

was making eyes at the cereal maker, which also sells Gatorade. The news pushed Pepsi down 2.7%.

And the NYSE today looked like it had been visited by monument-wrapping conceptual artist

Christo. The front facade was decked out in blue in honor of German insurance company

Allianz's

(AZ)

addition of its ADRs on the NYSE.

Market Internals

Breadth was negative on the NYSE and positive on the Comp on moderate volume.

New York Stock Exchange: 1347 advancers, 1434 decliners, 993 million shares. 74 new 52-week highs, 32 new lows.

Nasdaq Stock Market: 2060 advancers, 1828 decliners, 1.8 billion shares. 77 new highs, 80 new lows.

Most Active Stocks

NYSE Most Actives

AT&T

(T) - Get Report

Corning

(GLW) - Get Report

Nasdaq Most Actives

WorldCom

(WCOM)

Oracle

(ORCL) - Get Report

Cisco

(CSCO) - Get Report

Sector Watch

Retail and e-finance stocks suffered today, as did transports.

The

S&P Retail Index

was off 2%. Yesterday, most components rallied on mixed October same-store sales results. Blue-chips

Home Depot

(HD) - Get Report

and

Wal-Mart

(WMT) - Get Report

were a couple of the components that ended on the downside.

TheStreet.com E-Finance Index

dropped 2.7%. Component

NextCard

(NXCD)

was the object of profit-taking today. It was down 14.4%. The stock bounced more than 45% yesterday after it announced better-than-expected earnings forecasts for 2003.

Transport stocks -- particularly airlines -- had a bumpy ride as well. The

American Stock Exchange Airline Index

fell 1%, as did the

Dow Jones Transportation Average

United Parcel Service

(UPS) - Get Report

was down 1.3% after it said it would acquire at least 13 pre-owned MD-11 planes from U.S. aircraft manufacturer

Boeing

(BA) - Get Report

last night.

Bonds/Economy

Bonds were down sharply most of the day following mixed signals from the employment data showing that average hourly earnings were rising faster than expected. But in late trading, they turned up, with the 10-year note even ending slightly up on the day.

The benchmark 10-year

Treasury note ended up 2/32 to 99 14/32, pushing the yield to 5.827%.

The 30-year

Treasury bond was 1/32 lower, to 105 13/32, and yielding 5.863%.

The

employment report

(

definition |

chart |

source

) for October presented a mixed picture. Nonfarm payrolls grew 137,000, below expectation of a rise of 184,000 and down from September's 195,000. The unemployment rate was unchanged at 3.9%. Average hourly earnings however, rose 0.4% ahead of expectation of a 0.3% rise and well above the September increase of 0.2%.

International

The major European indices were mixed at the close.

European markets had plenty to think about Friday morning, with news that the U.K.'s

Abbey National

and the

Bank of Scotland

have held preliminary merger talks, and confirmation that the

European Central Bank

intervened to buy euros in the foreign exchange market. That's its second move in recent times to prop up the battered single currency of the euro zone.

TheStreet.com

wrote a

separate story on the action.

The euro closed higher on the day after the intervention, at $0.8673. It reached as high as $0.88, though, shortly after the intervention. It had hit an all-time low last month of $0.82. The ECB said later that it had not asked any of its

Group of Seven

partners to help in the intervention.

London's

FTSE 100

was down 6.6 points to 6385.4. Over on the Continent, the

CAC-40

in Paris was down 1.39 points to 6398.92, and the

Xetra Dax

in Frankfurt was up 39.63 points to 7128.27.

Most Asian

equity markets ended the week on a positive note, as the Nasdaq's rally Thursday buoyed tech shares. Tokyo's market was closed for a holiday.

The yen closed higher against the dollar at 106.96.